Trump's Asian Pivot

Obama struggled to extricate US forces from the Middle East as a prelude to full blown Asian Pivot. The TPP was also envisioned as an integral part of the Asian Pivot. Despite protestations to the contrary, the Asian Pivot and the TPP were two sides of the same coin - US strategy designed to contain China and slow down a true global peer competitor.

The guiding elements of US foreign policy in Asia over the last twenty five years have been:

• Foster the growth of free markets, especially in China
• Encourage the foundation of liberal and democratic institutions that accompany free markets
• Manage the regional rivalries between China and Japan, and between India and Pakistan
• Foster the development of ASEAN as a countervailing force against China
• Prevent a North Korean army breakout south of the 38th parallel
• Lastly, avoid committing the US army in a land war in Asia

Things have not gone according to plan. Post 9/11, the US was sucked into Afghanistan and then intervened in Iraq. Bogged down in both these wars, the US watched Russia help upgrade the Chinese armed forces. Expansion of the Chinese defense budget was made possible by the remarkable growth in the Chinese economy over the last two decades. Its growth trajectory makes it just a matter of time before the Chinese economy exceeds that of the US sometime by 2025.

With few surviving institutions, both Afghanistan and Iraq have proved to be impossible to reconstitute as coherent governable nation states. Obama's goal of drawing down US forces in the Middle East to check the rapid military expansion of China - the Asian Pivot - has remained a bridge too far.

A fundamental flaw in Obama's idea of the Asian Pivot was that it was fundamentally defensive in its posture. The goal was to create an alliance of Asian powers that would work with the US in their shared fear over Chinese designs. In case of a shooting match, the strategy was to enforce a naval blockade at the first island chain which would bring China to the negotiating table.

What the US did not count on was the sophistication of Chinese strategy to create situations on the ground in the South China Sea in an attempt to enforce the "nine dash line". Chinese diplomacy has also been adroit. ASEAN is unable to speak with a single voice. More recently, with Duterte coming to power as the President in the Philippines, the US alliance is looking frayed. The Asian Pivot has been called into question.

It is clear that Trump will not go forward with the TPP. However, Trump is trying to change the rules of the game that governed the US as a status quo power attempting to contain China by forming an alliance with China's neighbors. This pure defensive posture is being cast aside. Trump has shown that he will be unconventional and unpredictable. During his campaign Trump came down hard on China, but I believe that he will follow up the rhetoric with actions which will have multiple dimensions.

Trump has already fired the first salvo by taking a call from the President of Taiwan. Expect to see a set of fines levied on Chinese goods which are being "dumped" in the US market. Yes, this is a dangerous game as China can retaliate. But the bottom line is, China is much more dependent on trade than the US is. Also expect to see a series of naval exercises conducted by the US Navy with Japan, South Korea, Vietnam, and Indonesia.

As tensions rise between the US and China, expect to see the Yuan come under pressure and capital flight from China accelerate even further. If China attempts to keep the Yuan from depreciating, it is going to have to further deplete its foreign exchange reserves. Even $3 Trillion does not go that far when it comes to a run on the Yuan. Eventually, capital flight from China could serve to deflate the real estate bubble. This in turn could cause a crisis of historic proportions as the probability of a "hard landing" in China increases.

China's military trajectory has been remarkable. On paper, it could even hold its own in a showdown with the US in East Asia. But China has not fought a major conflict since 1979 when it blundered into a border war with Vietnam. China's brand spanking new weapon systems and war doctrine are largely unproven, as is the training and preparedness of its fighting forces. Do not be surprised if there is a short and sharp naval engagement between the two super powers as they feel each other out.

2017 will be an eventful year in US-China relations. Xi Jin Ping is attempting to pull off a successful 19th Party Congress in Fall 2017 and thereby consolidate his hold on power. He can well do without US provocations that undermine his power and prestige on the eve of the Party Congress. Trump is likely to take full advantage of this vulnerability in 2017.

If the US is to take on China in a military showdown, it has to do it now before the Chinese military modernization is complete. Five to ten years from now, China will likely have parity in various aspects of force deployment, especially as one takes into account its advantages in cyber warfare. China will have also completed large chunks of the One Belt One Road initiative in which China gets deeply intertwined with its neighbors' economies and infrastructure. By then the US alliance structure in Asia will have melted away.

Bottom line is that if the US needs to find a way to slow down China's military modernization. If the US is able to do this for the next two decades, China's demographic decline will do the rest. It will also give time for India and Indonesia both rising powers to start providing real balance to China in Asia.

For China the choice is likely to be a stark one (A) guns and butter while facing off against a more belligerent US, or (B) less guns and more butter and better relations with the US. After all the Communist Party in China has an unwritten compact with the people - Economic Prosperity but Limited Political Freedom. Can the Communist Party of China survive a severe economic downturn and still retain its absolute hold on power?

The challenge for US foreign policy is how to engineer a slowdown of Chinese military buildup without actually having to fight a war which neither side can truly "win". One key element is to wean Russia away from a defacto alliance with China. I wrote about this in a separate blog post.